March 3, 2021

Italians More Perplexed Than Anxious Over Latest Debt Crisis

As emergency meetings continue this week in Roman parliamentary offices and boardrooms that normally echo empty in August, Italians seem to have been caught off guard.

Conscious that their country’s public finances have long teetered on shaky ground, they are bewildered by how quickly — and how aggressively — Italy has been targeted as the latest weak link in the euro zone. On Wednesday, shares in Milan slid 6.6 percent.

“We all know very well that the Italian economy is weak,” said Pietro Scanzano, director of medical services for Italy’s national health agency in the city of Rieti, as he waited for a train at Termini Station in Rome.

But Italians, he said, were generally reticent about dwelling on crisis scenarios because, from a psychological point of view, “the more we speak about problems, the more the problems increase.”

For many Italians, the marketplace turbulence does not reflect the day-to-day reality of generally parsimonious homeowners in the euro zone’s third-largest economy, after Germany and France.

“We’re not so badly off,” said Ferdinando Angelini, an industrial machine repairman based in Rome. “We may not be so rich, but we are capable.”

Mr. Angelini said that he was “very surprised” by the financial turmoil of recent weeks. For Andrea Tomat, president of Confindustria Veneto, the business association in one of Italy’s most productive regions, that in itself is not surprising.

“Individuals see that they’re doing well in their world and so they have a positive perception of life,” he said. “They believe that because they do their work well, the situation will return to normal.”

For many Italians, in fact, the marketplace is a foreign territory that speaks its own language.

“The average Italian doesn’t know what a spread is or the difference between a bund and a bond; their understanding tends to be generic,” said Nicola Cacace, an economist and the president of Onesis, a consulting firm.

“Sure they hear the rumors of the crisis getting worse,” he said, but if they understand that the situation is deteriorating, it is because they have been feeling it directly.

Indeed, “long before the world crisis, Italian growth was lagging behind Europe,” and its debt was sky-high, said Mario Baldassarri, an Italian opposition lawmaker who is the head of the Senate finance committee and a former deputy finance minister. “The problems may have increased, but they are the same as before when there was no global crisis.”

Questions about Italy’s solvency, its hefty public debt levels and its stagnant growth over the past decade have been endemic to the national public discourse for years.

At 120 percent of gross domestic product, its public debt ratio is the second-highest in Europe, after Greece’s. Real G.D.P., meanwhile, is expected to increase by just 1 percent this year, according to Eurostat, the European Union’s statistics agency.

While Italians may have been shaken by the latest market reactions, they are no strangers to economic downturn. And many are now chiming in with the business establishment to complain that the country’s political class has not had the necessary strength or vision to carry out the structural changes needed for coping with a changing global economy.

If anything, some see the external pressure for Italy to get its finances in order as “an opportunity to force our political class to push through important structural reforms that they have not been able to do” on their own, said Andrea Rangone, an economics professor at Politecnico university in Milan.

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